ADNC Plunges 54%: Says Not Getting Next iPhone Biz

By Tiernan Ray

Shares of chip makerAudience (ADNC), which went public May 10th and whose specialized digital signal processors (DSPs) are intended to improve sound quality in mobile devices, are down $2.37, or almost 13%, at $16.49 in late trading after the company this afternoon said it now expects not to get the business from Apple (AAPL) to have its designs included in the next iPhone, contrary to prior expectations.

Remarked Audience:

Audience now believes that it is unlikely that the OEM will enable Audience’s processor IP in its next generation mobile phone. Audience is not aware of any intended changes by this OEM to its use of Audience’s processors or processor IP in prior generations of the OEM’s mobile phones.

Audience recognizes royalty revenue from the license of its processor IP one quarter in arrears of the sale of the device, when it has received a royalty report from its OEM. As a result, Audience does not expect any impact on its business outlook for the third fiscal quarter from the situation described above. The revenue and net income impact of the OEM’s next generation mobile phone would first affect Audience’s financial results one quarter after the OEM commences end customer sales of its mobile phones.

Peter Santos, president and chief executive officer, commented, “While we are disappointed by this development, we are confident in the diversification of our business and see sustainable growth in 2012 and beyond. As such we are raising guidance for the third quarter of 2012. Looking ahead, we believe our expansion into adjacent markets such as Smart TVs, automotive, and notebooks, will continue to bring growth in 2013 and beyond.”

For the current Q3 ending this month, Audience actually raised its outlook to a range of $35 million to $38 million from a prior $33 million to $36 million, and projected 11 cents to 15 cents a share, citing “the strength of hardware shipments quarter to date and the forecast for the remainder of the quarter.”

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.